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CME Fines Morgan Stanley $50,000 for Oil Trades

By Dan Strumpf NEW YORK--Exchange operator CME Group Inc. (CME) said Friday it ordered Morgan Stanley (MS) to pay a $50,000 fine for allegedly overstating its open interest in a crude-oil contract in November 2011. CME said the investment bank overstated its position in the physically settled December 2011 crude-oil futures contract by 13,267 contracts, or 51.6%, one day before the expiration of the contract. The overstatement violated a CME rule regarding holding concurrent long and short positions in the futures market, CME said. Morgan Stanley agreed to pay the fine as part of a settlement in which it neither admitted nor denied the rule violation, CME said. A Morgan Stanley spokeswoman declined to comment. The fine is the second penalty the bank has faced this week in commodities trading. On Tuesday, the Commodity Futures Trading Commission said it reached a $5 million settlement with Morgan Stanley for alleged misconduct regarding several off-exchange futures trades between April 2008 and October 2009. The trades were executed noncompetitively and were deemed "fictitious sales," resulting in the reporting of false prices, in violation of government regulations, the CFTC said. Ben Fox Rubin contributed to this article. Write to Dan Strumpf at dan.strumpf@dowjones.com